With increasing pressure on university presidents to provide
educations that meet 21st century needs as well as to keep their
institutions viable, an understanding of transactional and
transformational leadership skills is necessary. While transformational
skills are highly regarded for their vision and sense of mission,
transactional skills focusing on the exchange of work for various types
of rewards should not be dismissed. This Delphi study sought opinions of
university presidents to arrive at a consensus regarding their ranking
of major transactional and transformational management practices and
concepts, major issues confronting them, and effective group and
individual leadership skills. A number of actionable results and
implications should interest university presidents and also business
managers.

**********

This study is concerned with the characteristics of presidents of
institutions of higher education who are considered transformational and
transactional leaders. The study adds current data to the published and
perceived characterization of such leaders and their approaches to
changing the learning environment at their institutions. While
addressing the widespread appeal of transformational leadership and its
practical application to higher education, the study also profiles the
qualities needed by leaders to introduce a climate of change utilizing
transformational or transactional leadership.

Literature Review

The growing consensus among educators and policy-makers is that the
current process of education must change dramatically. A different
approach is needed to prepare today's leaders to meet
tomorrow's challenges. The new structure should enhance
preparation, allowing for innovation and futuristic thinking in a
collaborative setting (Rodriguez, 1999).

Americans at all levels have had great faith in the power of
education to improve their quality of life. Education has been viewed as
an escape route from poverty, an antidote to intolerance born of
ignorance, a primary source of national prosperity, and the foundation
of democracy (Swail, 2003). Scientific and technological advances have
intensified in the past two decades, and, for the first time in history,
created a truly global community. Modern telecommunications link all the
corners of the planet. Like the technology that helped create the
emerging worldwide marketplace, the global community is in a dynamic
period of change. Business communications, capital and financial
services, research, and educational programs increasingly move across
national borders. The pace of change will accelerate, and the urgent
need for highly educated men and women who possess competence,
perspective, human values, and political courage will increase (New
England Board of Higher Education, 1991).

The prevailing view of management theory is that highly centralized
management is generally ineffective and inefficient in the face of
rapidly changing environments, such as those faced by organizations in
the "knowledge industry." Rather, those closest to the market
and production processes are likely to have the best information and
ideas about what directions to take or changes to make and how to do
this in a timely fashion. Their efforts can be guided by budget
discipline-an overall spending target-and by indicators of movement
toward desired results. But such indicators should measure total
spending and its results (outcomes), rather than count how many of a
particular input are used or how resources are deployed by the units,
(e.g., colleges and departments), who are nearest to the market and the
productive process (Feinberg, 2005).

The president, as the chief executive officer of an institution of
higher education, is measured largely by his or her capacity for
institutional leadership. The president shares responsibility for
defining and attaining goals, for administrative action, and for
operating the communications system linking the components of the
academic community. The president represents the institution to its many
publics. The president's leadership role is supported by delegated
authority from the board and faculty, and degree level of delegation is
the key to establishing leadership (Crawford, 2003).

As the chief planning officer of an institution, the president has
a special obligation to innovate and initiate. The degree to which a
president can envision new horizons for the institution, and can
persuade others to see them and work toward them, will often constitute
the chief measure of the president's administration (Leithwood,
1992).

The president is expected to infuse new life into an institution,
and may at times be required, working within the concept of tenure, to
solve problems of obsolescence. The president will necessarily utilize
the judgments of faculty but may also, in the interest of academic
standards, seek outside evaluations by scholars of acknowledged
competence (Leithwood, 1992).

It becomes the duty of the president to insure that the operating
standards and procedures within the college or university conform to the
policy established by the governing board and to the standards of sound
academic practice. The president must also ensure that faculty views,
including dissent, are presented to the board in those areas and on
those issues where responsibilities are shared. Similarly, the faculty
should be informed of the views of the board and the administration on
like issues (Leithwood, 1992).

The president is largely responsible for maintaining existing
institutional resources and creating new resources, for overseeing a
large area of non-academic activities, for public understanding, and, by
the nature of the office, is the chief person who speaks for the
institution. In these areas and others, the president's work is to
plan, organize, direct, and represent. Transactional presidents perform
these functions of management and, at the same time, focus on keeping
the institution running smoothly and efficiently. In contrast, the
transformational president will also perform these functions with
empowered and authoritative delegated teams while being visionary and
concerned about charting a mission and direction. Thus, the
president's position, by its responsibilities, is the key strategic
source within a higher education institution from which leadership, and
more specifically, transformational leadership, should originate
(Leithwood, 1992).

Higher education is at a crossroads. It must redefine its mission
accompanied by measurement standards as to how it is going to meet the
needs of citizens demanding higher education in the 21st century. Higher
education should take into account the impact of globalization, the
development of information and advanced communicative technologies, the
rapid change in demand in employment, and the critical need for highly
qualified educators who have practical experience in their disciplines.
As enrollments continue to expand, educators, state governments, and
business should begin working in a partnership atmosphere (Alexander,
2000). This might begin with transformational leaders as presidents of
institutions of higher education who comprehend the situation and
provide visions of the changes and directions needed to achieve this
atmosphere.

Overview of Leadership and Its Application to Education

Historically, organizations have been viewed as learning systems in
which success depended on the ability of leaders to become
direction-givers and on the organization's capacity for continuous
learning (Garrat, 1987). Transformational leaders tend to have the
attributes to learn across their specialist discipline. Transactional
leaders are usually at the top of their functional specialty and have
limited perspective to see that change is needed and what the
consequences may be for continuing the same practices (Bass, 2003).

Elements of quality leadership exist within every functional
activity, with representatives serving in any capacity that can
influence change. Quality leadership is demonstrated if effective
results are recognized and realized. Traits that define effective
leadership are included in either a group or individual category. Group
traits include collaboration, shared purpose, disagreement with respect,
division of labor, and a learning environment. Individual traits include
self-knowledge, authenticity/integrity, commitment, empathy and
competence (Astin and Astin, 2000). (See Table 1.)

Transformational Leadership

Transformational leadership is the current focus of concepts
relating to organizational leadership. These concepts are based on
vision statements that provide the directional path for the
organization. In addition, the vision statement should be supplemented
with a mission statement that energizes and inspires all members of the
organization as they pursue obtainable objectives. The vision and
mission statements establish the long-term goals, are the basis for the
organization's strategy, and identify methods for implementing the
strategy.

Transformational leaders who communicate a vision and a sense of
strategy are those who "find clear and workable ways to overcome
obstacles, are concerned about the qualities of the services their
organization provide, and inspire other members to do likewise"
(Swail, 2003). Transformational leaders encourage development and
change.

Historical definitions of transformational leaders have depicted
them as heroes, with charismatic personalities expressing and promoting
a mission of major organizational change. Heightened scholarly attention
surfaced in the 1990s addressing the merits and theories of
transformational leadership. This was driven by two major undercurrents.
The first was the evolution of cynicism and disillusionment with the
very idea of leadership and the changing climates of opinion endorsing
various types of leadership. The second was the constant change in
leadership styles that were the "order of the day" as
organizations attempted to adapt to the wider cultural and economic
shifts society. Therefore, interest and research in transformational
leadership began to boom (Bass and Avolio, 1993). The transformational
leader is still a long way from being the leader for every situation,
and, as a result, there are few empirically documented case examples of
the transformational leaders' acumen.

Transformational leadership is value driven. The leader sets high
standards and purposes for followers, engaging them through inspiration,
exemplary practice, collaboration, and trust. Transformational
leadership aims at responding to change quickly and at bringing out the
best in people. Such leadership is change-oriented and central to the
development and survival of organizations in times of environmental
turmoil, when it is necessary to make strategic changes to deal with
major threats and opportunities. It derives its power from shared
principles, norms, and values. Leaders who encourage transformation
share power, are willing to learn from others, pay specific attention to
intellectual stimulation, and the individual's need for achievement
and growth (Ramsden, 1998; Caldwell and Spinks, 1999; Bass and Avolio,
1993).

The transformational leader may be needed in the scholarly
community (Bass and Avolio, 1990; Leithwood, 1992, Sergiovanni, 1990;
Silins, 1994). A key factor is the introduction of entrepreneurialism to
the public sector as higher education institutions attempt to adapt to
the economic and organizational shifts in their environment. Declining
support for higher education from its traditional funding sources over
the last two decades emphasizes this point. As a result, major
short-term goals have been established, and day-to-day focus has shifted
to an environment of institutional marketing or business development;
the focus is not on students.

Transactional Leadership

Transactional leadership is centered on exchanges and based on two
factors: contingent rewards and management by exception. Contingent
rewards are the exchanges between leaders and subordinates in which
effort by subordinates is exchanged for specific rewards, such as salary
and benefits, bonuses, or other incentives. A job description, which
becomes the understanding of the leader and subordinates, states the job
to be executed and what benefits the employee will receive in performing
that job. Management by exception is the oversight that involves
corrective criticism, negative feedback, and negative reinforcement. The
common method is applying the evaluation of the job performance with the
proposed corrective performance that is presented as the solution,
preventing an occurrence of something not wanted, or listing the desired
actions in performing the job (Connor, 2004).

Transactional leaders control by their interest in and need for
output and use this output to maintain the status quo. Transactional
leaders demonstrate a passive style when using management by exception
with employees or subordinates. This passivity is present when employees
do not receive recognition for their positive contributions to the
organization but instead become the focal point of attention when errors
or problems occur. Transactional leaders provide clear goals and
objectives with a short-term scope or application and do not have a
major interest in changing the environment or culture except when
problems occur. The relationship that develops between the transactional
leader and the subordinate is an unwritten understanding that the
purpose of the follower is to carry out the wishes of the leader (Burns,
1978). Transactional leaders outline specifically and clearly what is
required and expected from subordinates. Such leaders and their
subordinates usually share a common understanding of goals and
expectations. The environment is highly structured with an emphasis on
managerial authority. This creates an uncreative climate and impedes
creative expansion of the organization due to the assumption that people
are largely motivated by simple rewards for specific job performance. In
many cases this results in a lack of improvement in job satisfaction.
The major disadvantage of this model is that it does not take into
account people's desire for self-actualization (Dollak, 2008).

Comparison of Transactional and Transformational Leadership

To some degree--as alluded to earlier--transactional leadership
might be characterized as a leadership of the status quo. Readers draw
authority from established power relationships. Transformational
leadership is a leadership of change--change within leaders, within
their subordinates, and within their organization.

Transactional leaders provide subordinates with something they want
in return for something the leader seeks. To be effective, a
transactional leader must realize and respond to subordinates'
changing needs and wants. Kuhnert and Lewis (1987), as cited in Carlson
and Perrewe (1995), suggest two levels of exchange: lower order and
higher order. The former is based on the exchange of material goods and
privileges, such as performance-based pay bonuses and paid access to
airline lounges for business travelers. The latter are less common and
maintain follower performance through exchanges of trust, loyalty, and
respect.

Transformational leadership draws from deeply held personal value
systems. Transformational leaders bring followers together to pursue
collective ambitions by expressing and disseminating their personal
standards. While transactional leadership can most certainly bring about
constructive outcomes, transformational leadership is held to promote
performance beyond expectations by drawing from charisma, consideration,
motivation, and stimulation (Carlson and Perrewe, 1995).

This study highlights the identity of effective leadership in
higher education by applying a matrix of group and individual qualities
to an expert panel of leaders. A Delphi study was used to obtain
consensus and determine if leadership-either transformational or
transactional or both--has been or can be effective. (See Table 1.)

Statement of the problem

Significant changes in higher education have occurred due to
taxpayer backlash (Alexander, 2000), the rapid growth of the Internet,
increasing globalization of higher education, economic shifts in the
demographics of society, and economic commerce. These factors are
creating the need for a new definition and approach to the management of
higher education institutions. Should presidents of such institutions be
utilizing transformational or transactional leadership management
practices and concepts to benefit the stakeholders of higher education?
Secondly, what leadership qualities are necessary for a university
president to develop a vision and well-designed strategy to overcome
funding limitations as well as alternative and workable plans in a
university setting? This study attempts to answer these questions.

Methodology and research design

This Delphi study selected 300 university presidents from private
and public higher education accredited institutions in the United States
from the 25th anniversary Higher Education Directory[R]. These
selections used a random numbering criterion from the Random Number
Generator in ExceFM software. Excluded from this selection were
university presidents representing highereducation institutions
classified as technical schools.

An invitation letter sent to the 300 selectees received a positive
response from 52 university presidents (17%). This broad-based
representation became the expert panel for the initiation of round one
of the Delphi study. The expert panel provided input to 41 distinct
indicators that included a list of concerns, issues, management
practices and concepts, and effective leadership qualities. These
indicators were force-rated through three rounds of surveys to determine
the level of agreement and consensus based on medians and interquartile
ranges for each indicator.

The panel was asked to refine the list by the following:

1. Indicating the relative significance of each major concern on
the rating scale by force ranking, and 2. Adding new concerns or
practices and concepts to the list.

The following were the statements the participants were asked to
rank:

I. Major transactional management practices and concepts

1. Provides a consistent direction that inspires trust.

2. Devotes time to communicate the organization's vision,
purpose and values.

3. Energizes the organization, including faculty, staff, and
students.

4. Holds individuals accountable for their performance and
commitments.

5. Readily shares information, resources, praise, and credit.

6. Ensures that individuals within the organization apply the
vision, purpose, and values within their spheres, of influence and in
their day-to-day activities.

8. Disagreement with respect. (G) Recognizes that disagreements are
inevitable and should be handled in a atmosphere of mutual trust.

9. A learning environment. (G) Allows members to see the group as a
place where they can learn and acquire skills.

10. Division of labor. (G) Requires each member of the group to
make a significant contribution to the overall effort.

The result of the first round was 100% participation.

Round 2 had a response rate of 70%, with 36 panelists
participating. Reasons for 10 of the panelists not responding were:
three retired, three resigned, two died, one transferred to another
institution, and one withdrew. No reason was given by six of the
panelists who ceased to participate and did not response to multiple
communications.

Round 3 had a response rate of 97% (35 panel members) of the
adjusted panel from Round 2. One panelist withdrew.

Discussion of Delphi Results

The data from the expert panel were analyzed using two criteria:
level of agreement and consensus. The level of agreement for each of the
41 indicators was expressed using the median as the unit of measure.
Supplementing the median was the mean (average), and both taken together
provided support for determining the level and order of importance. The
level of consensus of each of the 41 indicators was expressed as the
interquartile range. Supplementing the interquartile range was the
standard deviation which, taken together, provided support for
determining the level of consensus. The priority ranks (level of
agreement) were combined with the degree of consensus to determine the
overall importance of the major concerns.

Final ratings resulted in 25 (61%) of the 41 indicators receiving a
median rating of 6 or less, indicating that the panelists agreed or
strongly agreed the indicator was applicable, and 23 indicators (56%)
reached a level of statistical consensus with an IQR of 2 or less.
Indicators reaching the highest and strongest level of consensus were 8
representing 20% of the total indicators.

Analysis of Round 3

Round 3 was administered to obtain a consensus among the members of
the Delphi expert panel regarding the issues and leadership practices
and concepts and their importance.

Within the category "Issues," indicator 3 (traditional
and historical structures that are viewed as sacred) had the highest
median of 2. This indicator emphasizes the impact and influence that all
stakeholders have on the president before he/ she considers any change
initiative. The indicator's interquartile range was a 2,
demonstrating a minimal consensus among the expert panel members.

Indicator 2 (reduction in state or other government funding to
higher education) had a median of 3 with an interquartile range of 3.
This indicator presented the importance of budgets and expenditures and
related funding as a major issue confronting university presidents. The
interquartile range of 3 indicated a lack of consensus among the expert
panel members.

Indicator 1 (tenured faculty and/or staff reluctant to consider
changes due to personal impact) had a lower median than in the previous
rounds. The lower value was a median of a 4 with an interquartile range
of 3. This reflected the age-old issue of tenure and its related
application. While this indicator had an interquartile range of 3, a
consensus could not be indicated.

Within the category "major transformational management
practices and concepts," the indicator that recorded the highest
ranking with a median value of 1 was indicator 1 (provides a clear sense
of direction and purpose of the institution by creating a long term
vision). This indicator retained its level of importance and gained in
consensus throughout the three rounds, with round three concluding with
a perfect consensus as a result of an interquartile range of 0. This
indicator brings to the forefront the central importance of a strategic
plan as the key instrument of the university president.

Indicator 2 (establishes an environment of excellence of
performance that is not an act but a habit) within this transformational
category in Round 2, with a median of 2, was the second most important
indicator. Again this emphasizes the key role the president plays in
requiring quality within the environment of the university and all of
its activities. The interquartile range of 1 demonstrated consensus. As
with indicator 1, indicator 2 retained its level of importance and
gained in consensus throughout the three rounds. Round 3 concluded with
an interquartile of 1, demonstrating a consensus.

Within the category "major transactional management practices
and concepts" for Round 1, indicator 1 (provides a consistent
direction that inspires trust) again had a median value of 1. This
indicator reinforces the analogy that the university president is the
central point for all stakeholders in providing a climate of strength
and reliance for stakeholders' trust. The interquartile range of 0
improved from a 1 in Round 2, demonstrating an improved and complete
level of consensus.

In Round 2 within this category of "transactional management
practices and concepts," indicator 2 (devotes time communicating an
organizations vision, purpose, and values) was the second highest median
with a 2. This reflects the importance and need for the trait of good
communication by the president to all stakeholders that results in a
focus on a direction for the institution. The interquartile range
improved in its level to a 1 from a 2 in Round 2, demonstrating a
concluding Round 3 with a strong level of consensus.

For Round 3 within the category of "effective leadership
skills," the indicator with the highest median of 1 was indicator
1. This indicator (an individual skill of commitment) again had a median
of 1 accompanied with the interquartile range of 1. This presents the
critical need for a university president to have the passion, intensity,
and persistence that supplies energy, motivates individuals, and drives
group effort. The interquatile range of a 1 demonstrated a strong degree
of consensus.

The second-highest ranked indicator from the category of
"effective leadership skills" was the individual indicator 2
(competence). This indicator had a median of 2 and an interquartile
range of 1. This indicator demonstrates the quality of knowledge,
skills, and technical expertise required of a president for the
successful completion of the transformation effort. The interquartile
range of 1 demonstrated a strong consensus.

The third-highest ranked indicator from the category of
"effective leadership skills" was the individual indicator 3
(authenticity). This indicator had a median of 3 and an interquartile
range of 1. This indicator is the consistency between a person's
actions and most deeply felt values and beliefs. This leadership skill
depicts the sincerity and ethical application of a president's
decision making. The interquartile range of 1 represented a strong
consensus.

What was noteworthy was the strengthening of indicators from Round
2 to Round 3 within the categories of transformational, transactional,
and leadership for the two highest median indicators.

Findings, Conclusion and Limitations The following limitations
pertain to this study:

1. Research did not include management theory, as presented in
business colleges by educators or by management practitioners or
theorists, prior to 1965.

2. Restrictive boundaries were placed by the researcher on
phenomena relating to institutions of higher education whose purpose is
the development of technical skills, commonly referred to as technical
schools, even though many of these have now become accredited and offer
both bachelor and master's degrees.

3. Restrictive boundaries were placed by the researcher on training
schools developed by corporate America, whose programs may have become
accredited to offer degrees.

4. The selection of the Delphi method in itself imposed limitations
relating to the kind of communication process that was utilized. A major
challenge included selecting people with expertise in the problem and
then locating them.

Based on the findings of this study, the following conclusions were
drawn:

* The relationships within an environment of both transactional and
transformational leadership within higher education require further
research.

* The distinction between transactional and transformational
leadership practices and concepts in higher education may not be as
clear as traditionally believed.

* University presidents recognize the critical need for devoting
time in providing all stakeholders with a vision, purpose, and values
that result in a clear and consistent direction.

* University presidents recognize that establishing an environment
of excellence in their institution inspires trust in their leadership
and energizes the entire organization-faculty, staff, and students.

* University presidents realize that their major challenge in
introducing change is overcoming the traditional structures of culture
with their accompanying policies and procedures.

* Both transactional and transformational leadership practices and
concepts will have to be applied to ensure change because of the
reluctance of tenured faculty and staff to consider changes due to
personal impact.

* The reduction in state or other government funding to higher
education will require critical application of transactional and
transformational leadership practices and concepts to ensure that an
institution of higher education achieves its educational purpose.

* For an institution of higher education to succeed, its president
must have the individual quality of commitment demonstrated with
passion, intensity, and persistence. This will supply the energy and
momentum to motivate and stimulate the stakeholders to strive toward a
group effort.

* A university president's competence in knowledge, leadership
skills, and technical expertise is necessary to ensure the successful
completion of a transformational effort.

* The university president must demonstrate attribute of
authenticity-consistency between actions and deeply felt values and
beliefs.

Actionable conclusions:

* Updating and refining an institution's strategic plan, which
should include imperatives. These imperatives should be driven down into
the colleges and individual departments.

* Implementing a quality program of Six Sigma, and subsequent
application for the Malcolm Baldridge award.

* Immediate update of all policies and procedures to ensure that
applicability is possible for the university's current climate and
environment.

* Implementing a rigorous program of post-tenure review with high
standards applied uniformly to all members of the faculty.

* An extensive dialog with alumni and stakeholders to design a
participative institution development program.

* Contracts for presidents should be limited to five years with
only one renewal.

* University search committees should begin requiring candidates
for the president's position to have prior business and practical
experience in addition to academia.

Implications for business managers:

* A successful organization depends upon applying both
transformational and transactional concepts, practices, and principles.

* Balancing and applying both transactional and transformational
leadership can have a major influence on the effectiveness of an
organization.

* Transformational and transactional leadership together may be
more effective if both individual and group levels of leadership skills
are applied.

* The best leaders recognize that strong leadership does not come
in a single form, and each leadership style complements the other.

* Each issue and situation may call for a different approach and
unique form of leadership skill application.

Garrat, B. (1987). The learning organization and the need for
directors who think. New York: Harper Collins.

Gous, M. (2003). Leadership in support of learning for an unknown
future. Paper presented at the HERTDSA 2003 conference. Retrieved March
26, 2005, from http://surveys.canterbury.ac.nz/herdsa03/pdfsnon/N
1071.pdf

Silins, H.C. (1994). The relationship between transformational
leadership and school improvement outcomes. School Effectiveness and
School Improvement, 5(3), 165-184.

Spreitzer, G. M., Perttula, K. H., and Xin, K. (2005).
Traditionally matters: An examination of the effectiveness of
transformational leadership in the United States and Taiwan. Journal of
Organizational Behavior, 26, 205-227.

Dr. Basham's primary area of research is leadership,
especially transformational leadership in higher education. He brings 30
years of practical experience in the private sector--computer,
telecommunications, and security companies-to his present academic
position as head of marketing and management in the College of Business
and Entrepreneurship at Texas A &M--Commerce.

Table 1. What is Effective Leadership?
Group Qualities Individual Qualities
Shared purpose--reflects the Commitment--the passion,
shared aims and values of the intensity, and persistence that
group's members; can take time to supplies energy, motivates
achieve. individuals, and drives group
effort.
Collaboration--an approach that Empathy--the capacity to put
empowers individuals, engenders oneself in an other's place;
trust, and capitalizes on diverse requires the cultivation and use
talents. of listening skills.
Division of labor-requires each Competence--the knowledge, skill,
member of the group to make a and technical expertise required
significant contribution to the for successful completion of the
overall effort. transformation effort.
Disagreement with Authenticity--consistency between
respect--recognizes that one's actions and one's most
disagreements are inevitable and deeply felt values and beliefs.
should be handled in an
atmosphere of mutual trust.
A learning environment--allows Self-knowledge--awareness of the
members to see the group as a beliefs, values, attitudes, and
place where they can learn and emotions that motivate one to
acquire skills. seek change.
Source: Astin and Astin, (2000).
Note: From "Leadership reconsidered: Engaging higher education in
social change," by A.W. Astin and Helen S. Astin, 2000,
Non-Published Report, Chapter 11, p. 10-15.
Copyright 2000 by W. K. Kellogg Foundation. Adapted with permission.